Asian Stocks Up, Futures Up, Dollar Wallows As Fed Soothes Inflation Fears

26/05/2021 Stock markets in Asia rose on Wednesday while the U.S dollar stood near its lowest levels this year after U.S. Fed. officials reaffirmed a dovish monetary policy stance. Richard Clarida, the Fed’s vice chair, said on Tuesday that the U.S central bank would be able to curb an outbreak of inflation and engineer a “soft landing” without throwing the country’s economic recovery off track. U.S. equity contracts rose and Nasdaq 100 futures outperformed, after the tech-heavy gauge closed flat last night. Shares fluctuated in Japan and climbed in Hong Kong. A dollar gauge touched the lowest level since early January. Oil prices steady as concerns of a possible resumption in Iranian supply would cause a glut were offset by hopes for stronger U.S. fuel demand after a drop in weekly inventory estimates by the API (American Petroleum Institute). Brent crude oil futures for July gained 0.11%, to $68.73 a barrel, while U.S. WTI was at $65.89, down 0.27%. Gold notched a fresh four-month high as U.S Fed comments fuel rebound. The yellow metal pushed through $1,900 to its best levels since early January, opening the door wide to a re-test of key resistance at $1,960. Spot gold is currently 0.35% up, hovering around $1,905.70 levels.

The rand firmed to its best level in nearly two years on Tuesday amid easing US inflation concerns; its emerging-market peers also gained as the Fed’s comments helped calm investor nerves about tightening monetary policy. The rand reached an intra-day best of R13.8095/$, YTD being up 8.23% so far. The JSE closed flat 0.03% to 66,076.68 and the Top-40 flat also flat at 0.08%. Banks rose 2.23%, financials 1.88% and Industrial metals fell 1.99%, listed property 1.67% and resources 1.46%. Naspers gained 2.31% to R3,077.00, its best gains in five days; Prosus added 2.69% to R1,458.75. Tencent 1.31% firmer as the I.T sector in Hong Kong advances 1.01%

NEWS:
• South Africa’s Ruling ANC to Consider Charges Against Magashule
• McKinsey to Repay $63 Million to South Africa’s Transnet
• South Africa’s Eskom Slashes Debt by a Fifth; Bonds Rally
MEDIA SUMMARIES:
• Business Day.za: Next week is key as Netcare braces for third wave in Gauteng
EARNINGS:
• 8am: Mediclinic International (MDC LN), FY
• Arrowhead Properties Ltd. (AHA SJ)
• Bytes Technology Group Plc (BYIT LN)
EX DIV:
• IAP SJ, RBX SJ, VVO SJ
GOVERNMENT:
• South African ex-president Jacob Zuma due to appear in court on corruption charges
• Eskom to give update on plan to separate into different divisions
CENTRAL BANKS:
• 1pm:: Reserve Bank Governor Lesetja Kganyago to speak at Deutsche Bank event

EU/UK/US
Germany lead European shares to record highs after big property deal. The billion-dollar takeover deal combining two of Germany’s biggest property developers and soothing comments about inflation drove an upbeat mood among investors. The pan-European STOXX 600 index rose 0.3% to 446.44 points — an all-time high. Germany’s DAX gained 0.8%, also hitting a record high after a long weekend, boosted by news that Europe’s largest residential property group Vonovia SE agreed to take over its rival Deutsche Wohnen for about Euros 18bn. London stocks closed just below the waterline as investors digested fresh data on the UK’s trade with the European Union, as well as the latest UK borrowing figures and retail sales data.
The FTSE 100 ended the session down 0.31%, alongside France’s Cac-40 sliding 0.28%.

Wall Street slipped as economic data suggested supply constraints and price increases are holding back activity, though the Feds said the problem won’t last. U.S. home prices surged the most since the end of 2005, fuelled by bidding wars and limiting demand for new homes as construction backlogs continue to build. By the end of the day’s trading, the Dow had slipped 0.24%, the S&P500 0.21%, while the Nasdaq closed flat 0.03%. Stock futures firm this morning, with all major three indices in the green: Dow futures up 0.25%, S&P500 gaining 0.27%, while the Nasdaq futures outperforming by 0.37%.

Here are some events this week:
• CEOs of the largest U.S. banks, including JPMorgan and Goldman Sachs, will testify before lawmakers in the Senate Banking and House Financial Services committees Wednesday.
• U.S. initial jobless claims, GDP, durable goods, pending home sales on Thursday.

ASIA
MSCI’s broadest index of Asia-Pacific ex. Japan was up 0.21% near more than two-week highs, while Tokyo’s Nikkei added 0.35%. Australians market is flat 0.02%, with Communications sector firm 0.81% and the Materials slipping 0.63%. Shanghai composite 0.30% firmer, with Hang Seng gaining 0.71 as the I.T sector advances 1.01%. The market icapped by expectations of outflows due to MSCI’s regular rebalance on Wednesday, as 29 Japanese shares will be excluded from its main index. Elevated COVID-19 infections remain a problem as the government appears to push ahead with holding the Olympics in July despite health warnings against it.